First-quarter 2018 results. May 11, 2018

Transcription

1 First-quarter 2018 results ` May 11, 2018

2 DISCLAIMER This presentation contains forwardlooking statements. Such statements are not statements of historical fact, and reflect the beliefs and expectations of Natura's management. are intended to identify these statements, which necessarily involve known and unknown risks and uncertainties. Known risks and uncertainties include, but are not limited to, the impact of competitive products and pricing, market acceptance of products, product transitions by the Company and its competitors, regulatory approval, currency fluctuations, production and supply difficulties, changes in product sales mix, and other risks. This presentation also includes pro-forma information prepared by the Company for information and reference purposes only, which has not been audited. Forward-looking statements speak only as of the date they are made, and the Company does not undertake any obligation to update them in light of new information or future developments. 2

3 Q1-18 highlights: Another quarter of solid growth in sales and profitability across the group Solid top and bottom line improvement across the group Natura reported strong results on the back of regained leadership in CFT in Brazil and market share gains in Latam The Body Shop transformation is underway, with very encouraging results in Q1-18 like-for-like sales and EBITDA margin improvement Net-debt-to-EBITDA ratio of 3.3 times due to seasonal effects, ahead of our estimates Successful US$750 million bond issue, maturing in 2023 Further advances in sustainability 3

4 4 Consolidated Financial Performance

5 Double-digit growth in consolidated net revenue (R$ million) 2, st Quarter (pro forma 1 ) +11.0% + 9.0% at constant FX rates 2,687.6 On a reported basis, revenue grew by 55.5% in the quarter in BRL (3 months of TBS in 2018 only) Natura grew by a solid 6.7% 2 in the quarter The Body Shop advanced 8.5% 2 in the period Aesop reported 30.8% 2 growth Q1-17 Q1-18 Natura Aesop The Body Shop Pro forma¹ 1 were part of the consolidated accounts in the comparable period 2 At constant exchange rates 5

6 Strong double-digit rise in comparable pro forma EBITDA, supported by all businesses Consolidated EBITDA Q1-18 (R$ million) % Reported Q1-17 Non-recurring tax effect TBS EBITDA (pro forma) Comparable Q1-17 Natura EBITDA variation Aesop EBITDA variation TBS EBITDA variation Corporate expenses variation Reported Q were part of the consolidated accounts in the comparable period 2 Adjusted to exclude effects not considered usual or which are not comparable between the periods under analysis 6

7 Acquisition financing costs of R$ 95,5 million in Q1 Q1-17 Q1-18 Change Financial results Exceptional effects: PIS / COFINS reversal Aquisition financing costs Running financial results

8 Substantial increase in comparable, pro forma net income Consolidated net income Q1-18 (R$ million) Q1-17 Reported Non-recurring tax effects TBS net loss Q1-17 comparable net income (pro forma) EBITDA variation Depreciation var. Financial results var. Natura + Aesop 2.4 Income tax var TBS net income var Q1-18 comparable net income (pro forma) TBS acquisition effects 24.4 Q1-18 Reported Comparable net income pro forma of R$88.2 million in Q1-18 vs. a loss of R$1.3 million in Q1-17 Q1-17 comparable net income excludes non-recurring tax effects (PIS/COFINS provision reversal) Q1-18 comparable net income excludes all TBS acquisition-related expenses (financing, PPA, etc.) 8

9 Expected cash outflow from seasonal and The Body Shoprelated effects in Q1; indebtedness ratio on track for the year (R$ million) Free cash flow Free cash outflow of R$351.0 in Q1-18, due to: 1.4x Pre TBS acquisition Q1-17 Q1-18 Net-Debt to-ebitda ratio 3.6x 3.0x 3.3x 1.4x Q4-17 Q Guidance Free cash outflow at The Body Shop, in line with its seasonality: R$124.5 million Acquisition-related financing costs: R$64.0 million Natura working capital: R$175.0 million, mainly a temporary rise in inventory to support the Deleveraging ahead of plan: Net-debt-to-EBITDA ratio of 3.3x 9

10 Performance 10

11 Natura: Solid growth in the quarter; continued productivity gains (R$ million) Natura Natura Brazil Natura Latam 1 st Quarter 1 st Quarter 1 st Quarter 1, % % comparabl e at constant 1 FX rates 1, % +20.3% +23.1% at constant FX rates 1, , Q1-17 Q1-18 Brazil: Productivity gains +21.8% (Q1-17: +9.2%) Sales growth of 3.0%, after commercial Q1-17 Q1-18 Average number of consultants (thousand) -18.8% 1,281 1,041 Q1-17 Q1-18 Average number of consultants (thousand) +9.5% Latam: Strong 23.1% growth (constant FX rates) in the quarter, on higher productivity and Direct Sales channel expansion. Highlights: Argentina, Mexico and Chile Productivity (R$ by average available Consultant) +21.8% 1,876 2,284 11

12 Natura: Significant growth in comparable 1 EBITDA (R$ million) Natura Natura Brazil Natura Latam 1 st Quarter 1 st Quarter 1 st Quarter % % comparabl e 1 at constant FX rates +9.4% comparabl +83.3% e % at constant FX rates Tax reversal R$ Tax reversal R$ Q1-17 Q1-18 Q1-17 Q1-18 Q1-17 Q1-18 Q1-18 margin of 14.9% vs. 12.9% (+200bps) comparable EBITDA margin in Q Comparable: ex-pis/cofins reversal in Q1- Q1-18 margin of 16.0% vs. 14.8% in Q1-17 (+120bps), on a comparable basis Selling, Marketing and Logistics expenses down 5.2% Excellent performance across all countries: 88.7% EBITDA growth at constant FX rates, and 470bps margin improvement from higher revenues and expenses management 17 Administrative expenses up 1.8%, impacted mainly 12 by depreciation and amortization

13 Significant advances in sustainability emissions ahead of target, helped by a more favorable category mix and a more efficient order cycle The Body Shop has gathered 5.8 million signatures for its global campaign Forever Against Animal Testing, nearing its 8 millionsignature target 13

14 Performance 14

15 Aesop: Growth acceleration on strong LFL and store expansion (R$ million) 1 st Quarter % +30.8%at constant FX rates 201,1 Sales up by 30.8% 1 in the quarter Outstanding like-for-like growth of 18.0% 144,4 Total of 305 owned retail doors: 1T17 1T signature stores (+28 since March 17) 97 department stores counters (+12 since March 17) 1 - At constant FX rates 15

16 Aesop: Significantly higher EBITDA and EBITDA margin (R$ million) 1 st Quarter 8.4% % % at constant FX rates 13.4% 27.0 EBITDA is up by 118.4% 1 EBITDA margin up 500bps, including the acquisitionrelated retention plan for key executives Q1-17 Q1-18 EBITDA margin 1 - At constant FX rates 16

17 Performance 17

18 Further signs of recovery (R$ million) +16.5% 8.5% at constant FX rates Pro forma net sales up 8.5% at constant exchange rates Growth driven by franchise, owned stores and online Good performance in EMEA, APAC and retail in North America Q1-17 Q1-18 Total of 3,006 stores (down 43) 1,068 owned stores; net reduction of 31 locations (34 closures) 1,938 franchised stores; net reduction of 12 locations 18

19 EBITDA rise in the year and margin uplift (R$ million) 1T18 Margem EBITDA TBS +794 b.p. +26 b.p. 7,1% EBITDA of R$57.1 million, with margin of 7.1%, versus a negative margin in Q1-17 (pro forma), due to: -1,2% 1T17 Margem EBITDA +10 b.p. Margem bruta Despesas Outros 1T18 Margem EBITDA Lower discounts Lower occupancy costs in owned stores Higher franchisee sales 19

20 Natura &Co Key takeways Solid top and bottom line growth in the first quarter Strong contribution from all three brands and businesses Confirmation of recovery in Brazil and continued expansion in Latin America; strong profitability growth Turnaround underway at The Body Shop Continued growth at Aesop Natura &Co on track to deliver its medium-term targets 20

21 Thank you 21